Musings in the life of an internist, cardiologist and cardiac electrophysiologist.

Wednesday, August 27, 2008

How to Make a Hospital Profit Center Really Profitable

Most of us want change for our healthcare system.

Real change...

... for the better.

But when we think of "change," most of us think of transformation, conversion, correction, or plotting a new course for our healthcare system....

... not adding monetary change to profit centers for hospitals.

So imagine my surprise when across this press release from our newly-christened Democratic Presidential nominee that contained a little pork-spending for a hospital in my state to put up (are you ready for this?) new equipment in a cardiac electrophysiology laboratory.

Okay, let me get this straight.

Cardiovascular disease in virtually every hospital in America is a profit center that helps support other budget-neutral or budget-negative programs. As a case in point, this particular medical center, according to it's Guidestar non-profit Form 990 tax return, performed 4,452 procedures in its labs and spent over $50 million dollars on its "Cardiovascular Product Line" in 2006 and received some $404 million in payments for healthcare rendered.

So why on earth do they decide to tap a political figure for an "earmark" of another $1 million dollars? Well, it seems they do it because they can:

"The Advanced Flatplate Cardiac Catheterization/ Electrophysiology laboratory in Springfield, IL, would perform advanced cardiac catheterizations and interventions, cardiac electrophysiological and mapping studies, and ablation therapy to treat abnormal electrical functions of the heart. The new flatplate delivers less radiation to the patient, produces sharper and clearer images that enhance diagnostic and treatment capabilities, and has the ability to produce 3-D imaging for improved detection and mapping of diseased vessels."

Mind you, in a state teetering on bankruptcy, this request is not to funnel state dollars to bring services to an underserved area or save a financially teetering hospital that a community depends on. Rather, this earmark is aimed at a flourishing regional medical center that already has an electrophysiology laboratory with a second laboratory at the neighboring hospital several blocks away. No, this "earmark" is just to upgrade their equipment. And while they're at it, they decided to ask for upgraded Vascular Lab equipment, too, to the tune of another $1.8 million dollars:

Funding would enable equipment upgrades for vascular disease diagnostics and screening. This would allow Memorial Hospital to offer screening and diagnostic tests for earlier intervention and care locally.

Never mind there has been no proof to date that such screening prevents disease or limits costs.

Remember, too, that new capital equipment like this can be depreciated on their tax return and that patients' Medicare payments contain a specific "technical" fee component to pay for such capital equipment and its staffing when they have procedures in the laboratory already. Yep, that's right. When you have your procedure, a portion of the money pays your doctor, but a much larger portion pays the hospital for all of the lab equipment and overhead inherent to these procedures.

Now I appreciate that hospitals are having a difficult time balancing budgets in this economically challenging time. But each of us are seeing higher co-pays and deductibles to offset employers and insurers' ever-escalating costs as well. And really in the big picture of the US economy, $1 or $1.8 million dollars isn't much.

But if we really want meaningful healthcare reform, then making patients pay twice, once for their procedure and again in the form of a portion of their taxes that pay for these "earmarks," can only mean one thing: nothing, but nothing will change for the little man and our healthcare system.

Thank you so much for your comments. One very difficult aspect of researching our health care system is the lack of transparency surrounding what hospitals actually spend money on, and what their costs actually are. Your anecdote goes right to the point and I hope that local politicians don't miss it. Do you lobby your professional association to support of only cost-effective technology? Those of us who have less access to lobbyists would appreciate it!

About Me

Westby G. Fisher, MD, FACC is a board certified internist, cardiologist, and cardiac electrophysiologist (doctor specializing in heart rhythm disorders) practicing at NorthShore University HealthSystem in Evanston, IL, USA and is a Clinical Associate Professor of Medicine at University of Chicago's Pritzker School of Medicine. He entered the blog-o-sphere in November, 2005.
DISCLAIMER: The opinions expressed in this blog are strictly the those of the author(s) and should not be construed as the opinion(s) or policy(ies) of NorthShore University HealthSystem, nor recommendations for your care or anyone else's. Please seek professional guidance instead.